Arlington Heights: homeowner subsidies rather than business subsidies

At the Arlington Heights Village Board Meeting

The discussion to renew the Groot Inc. garbage contract at the Village board meeting has, once again, highlighted the distinction between Village subsidies to businesses rather than to homeowners. To begin with, there are two general categories of taxpayers: businesses and homeowners. The Village promotes economic growth solely by offering subsidies to businesses as opposed to homeowners.

Here is the difference between business subsidies and homeowner subsidies:

Supply side stimulus or a subsidy to businesses

Programs that subsidize businesses are considered supply side, or trickle down stimulus, for local economic growth. Supply side economics relies on Say's Law, whereby aggregate supply creates it's own aggregate demand. According to that theory, once you get a business into town it will magically produce consumers who have money to spend thereby supporting that business.

Trickle down, or supply side economic stimulus policies, have been discredited as a result of the Great Recession of 2008. That economic meltdown was mostly caused by years of supply side policies. Nonetheless, the Village board continues to cling to these failed ideas to stimulate growth in the local economy.

For example, programs the Village uses to subsidize businesses are the Zero Interest Loan Program and Retail Small Business Incentive Programs. A Freedom of Information Act (FOIA) request reveals that Kingsley and Ginnodo Archeticts are receiving a zero interest loan from the Village. Another example of a business subsidy is the ongoing annual payment to the Metropolis Theater which was purchased to bail out politically-connected developer Mark Anderson in 2004.

Other examples include the Village's willingness to rewrite the Cook County ordinance against puppy mills solely to keep Happiness is Pets in business. Then, of course, there are Tax Incremental Financing (TIF) districts, which are a direct payment to the developer crowd at the expense of community taxing bodies such as schools, libraries and the park district.

Demand side stimulus or a subsidy to homeowners

Village programs that would subsidize homeowners are considered a demand side stimulus. Once again we look to our neighbor Mount Prospect for examples of demand side stimulus programs. That municipality provides free leaf pickup to all residents and Property Tax Relief Grants. Both programs are designed to put money that could be spent to support local businesses back into the pockets of homeowners .

The Groot Garbage Inc. contract and leaf pick up

At the meeting we asked board members, Citizens To Be Heard, Item VIII, if free leaf pick-up could be included in the Request for Proposal (RFP) to Groot Inc. A leaf pick-up service is a subsidy to homeowners designed to put money back into the pockets of homeowners. Of course, the idea was met with the usual excuses of 'not possible'.

Mr. Recklaus, the new Village Manager, reflexively had all the cop-outs ready as to why the Village could not provide this service. He said that paying for a leaf pick-up program would require one of two options: charge residents more on their garbage bill or raise property taxes to cover the extra expense. Also, the prohibitive cost of additional equipment has been a favorite deterrent to offering such services to residents.

Strangely enough, whenever a business subsidy is implemented we never hear that property taxes must be raised to cover that extra expense. But, of course, additional revenue is needed to provide for the business subsidy.

We are not suggesting additional revenue for a leaf pick-up service. We are suggesting to substitute business subsidies for homeowner subsidies, because business subsidies in a depressed economy, as we are currently experiencing, are just not effective.

Finally some homeowner support

A demand side subsidy to homeowners, that is spent locally, has a much higher multiplier effect on local businesses that would also increase retail sales tax revenue. To ensure homeowners spend locally, as we have discussed many times before, local merchants must enroll in a program that accepts homeowner subsidies. For example, coupons or Arlington Heights Bucks, backed by the Village, could be redeemed only at local businesses.

The board is generally against any form of subsidy to the homeowner. This is because the village board has deep roots in the philosophy of supply side economics. Therefore, implementing a demand side strategy would require reversing the myopic reliance on supply side economic policies.

It is clearly time to subsidize homeowners rather than businesses. Subsidies to the homeowner that are spent locally,would indirectly support local businesses, as well. Also consumer/homeowner driven support would help return chronic store vacancies to the tax rolls.